Taung Gold dispute still unresolved

The Chinese-controlled company has not published its annual report for the year to March 2012 because, it said, the directors of the 68,92%-held SA subsidiary were refusing to release the management accounts.

But company spokesman James Duncan says work is continuing on advancing Taung's two SA gold projects - Evander 6/Twistdraai and Jeanette - near Welkom. Taung bought these projects at prices that raised eyebrows two years ago.

A group of South Africans, headed by geologist David Twist and lawyer Rudolph de Bruin, bought them from Harmony Gold Mining three years ago for R225m. Harmony chief executive Graham Briggs said at the time the value of these assets was not being recognised by the market.

That changed the following year when they were sold to a Chinese group, Wing Hing International, for R3,9bn. It is estimated it will cost another R4bn to bring them into production. Wing Hing was renamed Taung Gold International and listed on the Hong Kong stock exchange.

Jeanette was never developed because the gold lies under difficult ground, called khaki shale, that made mining impossible 50 years ago but may be overcome using modern technology. Evander 6 operated as a mine for 13 years but was closed in 1998 because it was unprofitable.

Hong Kong stock exchange

According to Hong Kong stock exchange statements, the dispute centres on the unauthorised issue of warrants to Twist, one of the SA company's founders, and a company called Electrum. Duncan says Taung cannot comment further but negotiations towards a settlement are advanced.

He says the dispute was not about payment or about wresting control of the company away from the Chinese shareholders. The vendors of Jeanette and Evander 6 were paid the full purchase price in shares; regulatory approvals have been secured and the agreement is now unconditional.

Taung has enough cash to continue with the projects. A bankable feasibility study for Evander is close to completion and a prefeasibility study on Jeanette will begin next month.

"As with all companies at this stage of growth we are continuously considering fund-raising options but decisions will only be taken on the composition of funding once the bankable studies for each project are complete and prevailing market conditions have been taken into account," he says.

"Given current global market conditions and, in particular, those relating to 'junior' gold developers, we are in the position of having secured rights over a substantial gold endowment at two flagship projects, have advanced the study work on both projects significantly over the past 12 months and have sufficient financial resources to move the company to the next level," Duncan says.

Source: Financial Mail via I-Net Bridge